#AskTDS: What happens if someone else pays my tenancy deposit?

AskTDS blog image - What happens if someone else pays my tenancy deposit?

In this week’s #AskTDS, we answer a tenant’s question; “What happens if someone else pays my tenancy deposit?”

The Tenancy Deposit Protection (TDP) legislation came into force on the 6 April 2007; there were amendments made under the Localism Act 2011 and the Deregulation Act 2015 to the initial requirements, and these changes often get missed and forgotten about.

Particularly with the changes brought in with the Deregulation Act 2015, a person or organisation providing the tenancy deposit on behalf of the tenant is identified as a relevant person.

So, what does this mean? Well, a relevant person is entitled to receive a copy of the Prescribed Information (PI) which also shows their details. A relevant person could be a Local Authority, an Employer, a family member or friend, so asking the question ‘who provided this tenancy deposit?’ may well help later in the process and at the end of the tenancy. We get a substantial number of queries about a guarantor to a tenancy; if they paid the tenancy deposit, they are a relevant person and therefore entitled to the PI documents, including the scheme leaflet.

Landlords and letting agents need to be aware of this obligation and handle payments carefully. A tenant who pays the funds directly in cash or using a payment card or a cheque should also be asked to confirm whether the tenancy deposit is being paid by them or whether it has come from elsewhere. An audit trail to show what happened may prove useful if questioned in the future. If the payment obviously comes from another party, then the requirements need to be adhered to and documents served.

The TDS guidance documents and the TDS Prescribed Information template makes provision for the details of the relevant person to be given, and the tenant should therefore be asked to sign this also.

A relevant person may not be able to participate in any tenancy deposit dispute unless requested and authorised by the tenant, but remember, the deposit is paid for the tenants’ obligations and unless there is due authority to release any tenant monies elsewhere, that payment would be sent correctly to the tenants.

Best practise would be to also record the details within the tenancy agreement where someone has paid the deposit on behalf of the tenant and to specify whether it will be returned to this person at the end of the tenancy.

Agreeing this upfront and in writing via the tenancy agreement should alleviate any end of tenancy confusion, and make sure, not only that the tenancy deposit is protected, but that you have recorded and served all documents correctly.

About TDS

Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.

We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.

TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.

TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.

TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.

TDS Northern Ireland: TDS is Northern Ireland’s leading and only not for profit tenancy deposit protection scheme.

TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.

These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.

ARLA|Propertymark: For agents who would like to stay up to date, you can contact Propertymark | ARLA at: join@propertymark.com. By being a member of Propertymark | ARLA you will be eligible for TDS Insured best headline rates.

RLA: If you are a landlord and would like to keep up to date with any changes that may affect you or your responsibilities, you can contact the RLA at: info@rla.org.uk and quote reference: dg715 to receive 25% off your first year’s membership.

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